Past studies have looked into the role of energy in South Africa’s economic growth, but their methods have provided only limited information about whether South Africa can make a smooth transition from dirty to clean energy. It’s therefore important to find out whether South Africa would be able to make a smooth transition from non-renewable energy to cleaner energy, and grow the economy at the same time. The population is currently growing by 1–2% per year and is forecast to rise by around five million between 2022 and 2027.
Costlier services drive South African inflation higher
We used an analytical tool called "continuous complex wavelets" to see how renewable and non-renewable energy influences growth over time. Renewable energy saw its biggest surge after the 2010 launch of the Renewable Energy Independent Power Producer Procurement Programme. We used an analytical tool called “continuous complex wavelets” to see how renewable and non-renewable energy influences growth over time. South Africa recorded an average real GDP growth rate of 1.0% in the decade to 2022, below the 3.0% average for Sub-Saharan Africa. As South Africa continues to navigate the global economic landscape, its ability to maintain reform momentum and strengthen diplomatic ties will be pivotal in ensuring long-term success.
Non-renewables, renewables and economic growth: what’s there to know?
Want to get insight on the economic outlook for South Africa in the coming years? FocusEconomics collects projections out to 2034 on 54 economic indicators for South Africa from a panel of sasol fuel 27 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator.
Frequently Asked Question about South Africa’s Economy
It is heavily dependent on non-renewable energy (coal), which also worsens global warming and speeds up climate change. But it desperately needs to grow the economy at a faster rate, given very high unemployment, poverty and inequality. After 2000, there was a very sharp increase of almost 25% in the use of renewable energy throughout the decade. According to our model, this sharp increase was enough to have an impact on economic growth over the short term but not over the long term. We set out to discover whether renewable energy in South Africa, such as wind or solar power, supports sustainable economic growth. We also wanted to find out if renewables can replace non-renewable energy as a source and enabler of economic growth.
Resilient South Africa: How 2025 is Shaping Up for Economic Growth Amid Global Challenges
The formation of the GNU after the May 2024 elections, comprising ten political parties, has fostered collaboration on critical reforms in energy, healthcare, and transport. “Removing electricity constraints has far-reaching positive implications for South Africa’s equity https://www.absa.co.za/ and bond markets,” said Sanisha Packirisamy, Chief Economist at Momentum Investments. South Africa is rich in natural resources, with significant reserves of gold, diamonds, platinum, coal, and iron ore.
There is very little in the way of manufacturing growth in the region and this will be a key factor if the SADC region wants to see economic prosperity. According to the Bureau for Food and Agricultural Policy (BFAP), their analysis indicates that for the first three quarters of 2024, decline in real agricultural GDP is estimated to be between -5% & -6%, as opposed to the current official decline of -15.5%. Their projection for the full year, indicates that the agricultural sector will contract by -4.8% in real terms in 2024. Download one of our sample reports to visualize what a Consensus Forecast is and see our South African GDP projections. Companies should use macroeconomic scenarios for planning to stay agile and prepare for deviations from baseline expectations.
- But coal-fired power, while declining, remained the main source of electricity.
- This is because non-renewables are not a reliable source of energy, as shown by loadshedding.
- Key manufacturing areas include automotive, machinery, mining equipment, textiles, and processed foods.
- This new report asserts that recent changes in the political and economic context offer a unique opportunity for policymakers to not only generate a robust economic recovery but also ensure that the benefits are shared across all sectors of society.
- According to our model, this sharp increase was enough to have an impact on economic growth over the short term but not over the long term.
Gulf Co-operation Council’s expanding African footprint
At this point, the drop in coal consumption was actively dragging down the economy. This in turn reduced society’s income, as measured by the gross national https://www.liberty.co.za/ product. And because incomes were constrained, fewer private households purchased renewable energy systems. This in turn reduced society’s income, as measured by the gross national product.
We found that renewables can only sustain growth over six to 12 month cycles whereas policymakers work towards longer cycles such as the 2030 and 2050 sustainable development goals. Our model shows that an increased supply and higher consumption of non-renewable energy causes long-term economic growth over year cycles. Renewables, at best, have short-term growth effects over six months to one year. Our research further suggests that renewable energy policies, subsidies and programs made some positive short-term impacts on economic growth, measured as gross domestic product.
Structural transformation has also been limited, with most of the area’s economies heavily reliant on traditional, low-productivity sectors like agriculture or low-skilled services for growth and employment. Zimbabwe, in particular is facing extreme challenges, with inflation high, driven by food scarcity, high fuel and energy prices and a crumbling infrastructure. This has also been exacerbated by the loss of value in their local currency this year, making debt repayments and paying for exports doubtful. They have recently hosted a debt negotiation summit with creditors, but it is unlikely to alter their structural issues https://www.psg.co.za/ at home to see any significant improvement soon. The World Bank team will then present the key findings and recommended policy options. Moderator Thami Nkadimeng will facilitate a panel discussion with leading policymakers, subject matter experts, and stakeholders from affected sectors.